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F, an airplane company, has two categories of bonds: senior secured bonds (A) and unsecured debt (B). Bonds A are secured on assets (e.g., airplanes)
F, an airplane company, has two categories of bonds: senior secured bonds (A) and unsecured debt (B). Bonds A are secured on assets (e.g., airplanes) owned by F. Following the Covid crisis, the value of those assets decreased. How does this information impact your valuation of each class of debt?
A decreases, B decreases
A increases, B increases
A decreases, B increases
A increases, B decreases
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